Federal Court decides APP STORE not distinctive and clarifies role of the Registrar in Appeals

As the world’s most valuable brand (as shown here), it is unsurprising that Apple’s trade mark portfolio is large and pushes the boundaries of what is registrable. For example, in the USA Apple has secured registration for its store layout as follows:

Recently, on appeal from the decision of the Registrar of Trade Marks, the Federal Court of Australia rejected Apple’s application to register the trade mark APP STORE again on lack of distinctiveness grounds. This case illustrates the difficulty of registering descriptive marks but also contains valuable insights into the role of the Registrar in appeals from the Trade Marks Office.

The scope and history of Apple’s application for APP STORE

Apple filed an application to register APP STORE in Australia on 18 July 2008 in respect of services including retail services in class 35, telecommunication services in class 38, and maintenance and repair service in class 42.

During Examination, the APP STORE application was initially considered inherently distinctive and accepted. However, acceptance of the application was revoked and an objection under section 41(5) of the Trade Marks Act (“the Act”) was raised. Apple requested a hearing on the matter and a delegate of the Registrar found that an objection existed under section 41(6) of the Act – the critical difference being that under section 41(5), evidence of use after the filing date is permitted to establish whether the mark is capable of distinguishing the relevant services while under section 41(6), the mark must have already acquired distinctiveness at the filing date. For Apple, an objection under s 41(6) would be very difficult to overcome as it had only used the APP STORE mark for at most, 8 days before the filing date.

The Decision of the Registrar: APP STORE not distinctive

The Registrar’s delegate found that APP STORE is not to any extent inherently adapted to distinguish the class 35 retail services on the basis that the mark is “purely”, “directly” or “inherently” descriptive. This conclusion was also made in respect of the class 38 (telecommunications) and 42 services (maintenance and repair) on the basis that these services “fall within the purview” of an “app store”. Therefore, the delegate found that an objection under s 41(6) applied.

On the evidence, the delegate was not satisfied that the APP STORE trade mark had acquired a meaning related to Apple that overshadowed its descriptive meaning as at the date of filing.

The Federal Court agrees: APP STORE not to any extent inherently distinctive

Apple adduced expert linguistic evidence and survey evidence in support of its application before Yates J of the Federal Court. Apple argued that its use of APP STORE “involved an element of creativity” and was not a common expression at the time of filing.

The Court rejected Apple’s submissions, without being critical of the expert, Yates J. found that much of the expert evidence was “in large measure, argumentative, rather than factual, in nature”.

The Court held that APP STORE was not to any extent inherently adapted to distinguish the services claimed in the application because:

the evidence established that well before 2008, the word “app” had a well-established and well-understood meaning as being a shorthand form of computer application software.

the evidence established that at the filing date, the word “store” had a well-establish and well-understood meaning among traders and the general public that it was not confined to the notion of a physical store, but extended to an online store. The evidence showed extensive use of the expression “online store” since the mid 1990s and use of the word “store” by Amazon.com in connection with an e-Book store, Software Download store, and e-Documents store.

Therefore, the Court considered that members of the public would have understood APP STORE “as no more than an expression to describe a trade channel – a store – by or through which application software could be acquired”. For this reason, the Court held that as at the filing date, other traders would have had a legitimate desire to use the words “app store” to describe the same trade channel and activity in respect of computer software. Accordingly, the Court held that APP STORE was not to any extent inherently adapted to distinguish the class 35 services.

In relation to the services in class 38 and 42, the Court also decided that APP STORE was not to any extent inherently adapted to distinguish these services because the services covered under classes 38 and 42 are those which one would reasonably expect an “app store” to provide.

Apple’s evidence insufficient to demonstrate acquired distinctiveness

The Court was not satisfied that Apple’s evidence demonstrated that as at the filing date, Apple’s use of APP STORE had been sufficient to result in the mark distinguishing the services as being Apple’s and not those of other traders.

There was no evidence of any advertising or other promotional activities undertaken before the filing date in Australia aside from some press releases, which did not assist Apple as there was no evidence of how those press releases were used in Australia, except as appearing on Apple’s Australian website.

Although the Court accepted based on Apple’s evidence that:

a. Apple’s App Store aroused “significant interest” on the Internet as part of the launch of Apple’s iPhone 3G in Australia on 11 July 2008; and
b. many persons associated the idea of the App Store with Apple before the filing date,

the Court did not consider this to be sufficient to demonstrate that Apple’s use of APP STORE was such that the mark distinguished the services as those of Apple rather than as those of other traders.

Survey evidence filed by Apple did not, according to the Court, provide “any real assistance on this question” because:

the survey was conducted more than three years after the filing date; and

the survey established no more than as at early October 2011, there was an association between Apple and the term APP STORE. Such an association was not sufficient to demonstrate that APP STORE was functioning as a trade mark. This conclusion follows a line of authority in the context of shape and colour marks holding that evidence of promotion and use does not without more, demonstrate distinctiveness required for section 41 and in particular for section 41(6).

Apple’s new applications for APP STORE

In December 2014, Apple filed three new applications for APP STORE separately covering classes 35, 38 and 42. Although these new applications have a later priority date and would allow Apple to rely upon greater evidence of use, there is some uncertainty over whether Apple will be able to secure registration even with the additional evidence. In its decision, the Court commented that Google searches conducted post filing (although irrelevant for the purposes of the appeal) “do illustrate the use of those words in [a descriptive] way by other traders in relation to goods or services involving the supply of application software”. Such a finding may result in difficulties for Apple in demonstrating that the term APP STORE is exclusively associated with it.

Should the Registrar play an active role in appeals?

An interesting aspect of this case that received judicial comment is the role of the Registrar in appeals of Trade Mark Office decisions. Apple criticised the Registrar for taking an “overly active role” in the appeal by obtaining evidence that was not before the delegate. Apple submitted that the Registrar had taken “the remarkable step of obtaining her own expert and also affidavit evidence from third parties”. Of particular concern to Apple was the fact that some of the evidence obtained by the Registrar included affidavits from the solicitors for Microsoft Corporation, which had opposed Apple’s corresponding US application.

Apple also complained that the Registrar had objected to the admission of certain evidence and had taken “a partisan role to impassively seek to defend the Delegate’s primary decision, rather than simply providing assistance to the expert on questions of importance.”

Yates J was reluctant to state the “metes and bounds” of how the Registrar should or should not proceed as the consideration of each appeal will vary considerably and reasonable forensic decision making is not required to follow just one –and only one- course. In the absence of another party to the appeal, if there was a genuine alternative view on Apple’s evidence, then the Registrar would not be criticised for advancing that view for the Court’s consideration. To deny the Registrar that opportunity would in Yates’ J view, be to deny the Court the opportunity to make findings on an “appropriately informed basis”.

However, the Court cautioned that “appropriate judgment must be exercised in considering what evidence is truly necessary, and what forensic decisions should be taken, to fulfil the Registrar’s role, which must be to take reasonable steps under the Act to protect the public interest in respect of the registration of trade marks in Australia”.